Pass-Through Entity Withholding Tax Credit

UC §59-10-1103

Partnerships and S corporations (called pass-through entities) are required to withhold Utah income tax from the following:

  • Nonresident individuals
  • Resident businesses
  • Nonresident businesses

The term partnership includes limited liability partnerships and limited liability companies.

If you are a Utah nonresident individual, and are a partner in a partnership or a shareholder in an S corporation, you may have Utah withholding tax that was withheld or paid on your behalf by the partnership or S corporation. This withholding tax is allowed as a refundable credit on your TC-40, Utah Individual Income Tax Return.

Any withholding tax paid by the partnership or S corporation for you should be reported on the Utah Schedule K-1 given to you by the partnership or S corporation. Claim this credit by entering the following on TC-40W, Part 3:

  • Line 1 – The federal employer identification number (EIN) of the partnership or S corporation, as shown on Utah Schedule K-1, box A;
  • Line 2 – The partnership or S corporation name, as shown on Utah K-1, box B; and
  • Line 3 – The Utah withholding tax withheld or paid in your behalf by the partnership or S corporation.

Total this withholding on TC-40W, Part 3, and enter that total on Utah TC-40, page 2, line 35.

Do not send the Utah Schedule K-1 with your Utah Individual Income Tax Return. Keep this schedule and all related documents with your records. Also keep a complete copy of your return.

Processing of your return may be delayed or the withholding tax credit disallowed if you do not complete TC-40W, Part 3 with all the required information.